STAT PACK UPDATE: Reno-Sparks MSA Economic Stats

When compared to the February 2016 “headline” unemployment rate of 6.0%, this February’s rate was 1 full percentage-point lower. On the other hand, the average weekly wage (not adjusted for inflation) in the Reno-Sparks MSA continues slipping. February’s $4 drop in nominal wage to $795 was the 8th consecutive month it fell. When considered on a YOY basis, it is down -3.4% from $823 in February 2016. Other key economic stats are provided below.

If you have questions on any of the data presented below, don’t hesitate to contact John Restrepo at jrestrepo@rcg1.com

The RCG Employment Index12-month moving average (“12MMA”) for Reno-Sparks held at 98.3 in February, though it is up 1.0 point from the 97.3 recorded in February 2016. The Index remains 1.5 points below the peak. We expect the general upward trend will continue, maintaining the trajectory that started in 2011. The index peaked 11 years ago in December 2005 at 99.8, essentially 100. The trough of 89.6 occurred in January 2010. One of the main reasons for weakness in this February’s numbers is that last February was a leap year, leaving us one day less to rack up numbers in 2017.

Reno-Sparks job growth on a 12MMA in February 2017 fell 0.1 points to 4.6%. The rate of growth is up 0.5 points from February 2016, when it was recorded at 4.1%. The lowest rate of growth in the last 10 years occurred in December 2009 (-9.3%). The region has surpassed its previous high mark of 3.7% achieved in December 2006.

The 12MMA of the headline unemployment rate remained at 5% in February 2017 after January’s 0.1 point drop. When compared to the February 2016 headline unemployment rate of 6.0%, this February’s rate was 1 full percentage-point lower. The unemployment rate continues to improve steadily and is approaching rates seen before the Great Recession.

Of 77,192 construction jobs recorded for February in Nevada, 14,558 were in the Reno-Sparks MSA (12MMA). This is 9.4% more than the 13,308 jobs recorded the previous year in February 2016, and 61% of the peak (see below). The latest stats show that 6.2% of the region’s job-base was in construction. Construction jobs in the Reno-Sparks MSA peaked at 24,042 in August 2006 on a 12MMA basis. At that time, the industry accounted for 11.1% of all jobs. The construction sector continues to recover since bottoming out in February 2012 when there were only 8,792 construction jobs.

In February 2017 the 12MMA visitor total for Reno-Sparks fell by -0.14% from January to 408,965 or 87% of the peak (see below). However, on a YOY basis, visitation is up 3.4%. For comparison, visitation to Las Vegas is up 0.5% in February on a YOY basis. Reno had been lagging behind Las Vegas in visitor growth, but the tables have turned with YOY visitor growth rates in the Reno-Sparks MSA beating those of Las Vegas every month since June 2016.

Reno-Sparks has now seen YOY growth in visitor volume every month for over 2 straight years, since January 2015, at an average rate of 2.4%. The 12MMA peak occurred in May 2004, when 467,904 visitors came to Washoe County. The highest annual growth rate occurred in January 2013, when visitor volume grew 5.8%. Though there has been some improvement, the Reno-Sparks hospitality industry continues to face challenges.

Washoe County’s 12MMA YOY gross gaming revenue grew by 2.6% in February, bringing total revenue up to $66.8 million or 75% of the peak (see below). The growth rate has been positive for 2 consecutive years at an average rate of 3.0%.

Gaming revenues peaked in June 2006 at $89.4 million. On an annual growth rate basis, growth peaked at 5.5% in June 2006.

Like Clark County, taxable retail sales in Washoe County have been consistently growing, reaching $660.7 million in January 2017, a 10.7% jump compared to January 2016, on a 12MMA basis. This represents over 5 years of rising retail sales on a YOY basis. Sales have surpassed their previous peak on a nominal basis (not inflation-adjusted). As the chart shows, Washoe’s taxable sales growth in February was beating the state average by a 4.7 percentage-point margin.

MLS home resales in the Reno-Sparks area increased to 541 units in February 2017 on a 12MMA basis. On a YOY basis, home sales have been increasing for 2 straight years. After reaching record-high territory, home sales now appear to have leveled off. The median sales price rose to $308,450 (12MMA) in February, an 8.5% jump from February 2016. By comparison, the Las Vegas median resale price in February increased by 6.2% to $205,232.

In Q4, 2016 the Housing Opportunity Index (“HOI”) for the Reno-Sparks MSA increased 0.3 points from 52.3 in Q3 to 52.6 in Q4 on a four-quarter moving average (“4QMA”) basis. The U.S. index decreased 0.8 points from 62.9 to 62.1 during the same period. On a YOY basis, the Reno-Sparks index fell 2.5 points from 55.1 in Q4, 2015.

Reno-Sparks’ HOI peaked at 85.8 in Q1, 2012. It bottomed out at 17.3 in Q4, 2006 at the peak of the housing boom. The 10-year average is 60. The fact that the region’s latest index is lower than the 10-year average tells us that the housing market remains relatively affordable, but there could be issues in the future if the index continues to deteriorate.

The HOI is based on the share of homes sold that are affordable to a family earning the median income in the Reno-Sparks MSA, assuming standard mortgage underwriting criteria.

The 12MMA of the average weekly wage (not adjusted for inflation) in the Reno-Sparks MSA continues slipping after dropping under $800 in January to start off 2017. February’s $4 drop in nominal wage to $795 was the 8th consecutive month it fell. When considered on a YOY basis it is down -3.4% from $823 in February 2016.

Additionally, the inflation-adjusted 12MMA wage of $693 is $5 less than the previous month’s real wage of $698, bringing it -4.8% lower than the $728 recorded in February 2016. In February, Reno-Sparks’ average weekly real earnings were 5.8% higher than the Las Vegas average of $655, but where Las Vegas is improving, Reno-Sparks is headed in the opposite direction. Inflation-adjusted wages have experienced a significant 5.1% drop from the recent record high in May 2016 of $730.

Weekly hours in the Reno-Sparks MSA remained at 35.4 in February 2017, though they have been trending up for the last 29 months. When compared to February of last year, weekly hours are up 0.6 hours from 34.8. The 8-year peak occurred in October 2008 at 37.1 hours, while the trough (8-year) of 32.5 hours occurred in September 2014.

As of April 5, 2017, the average price per gallon for regular unleaded gasoline in Reno-Sparks saw an increase of $0.32 (12.2%) from $2.61 a year prior to $2.93. When compared to the previous month the price of unleaded fuel increased by $0.03 (1.0%).

According to AAA, “Gas prices on the West Coast remain the highest in the country, with six states in the region topping the list of most expensive U.S. markets: Hawaii ($3.05), California ($2.98), Washington ($2.86), Alaska ($2.78), Oregon ($2.72) and Nevada ($2.66).

Although the increase in prices has been moderate, it is possible this trend could continue as refinery maintenance wraps up, more expensive summer-blend gasoline becomes available and driving demand increases this spring.”

Per the World Gold Council, the end-of-month spot price of gold (ounce of pure gold) rose by 0.05% in March 2017 to $1,258, on a 12MMA basis. On a YOY basis, the price of gold increased by 9.9%. It peaked in December 2012 at $1,678. Prices have been increasing on a YOY basis for the past 8 consecutive months.